Australia's rich getting wealthier

By Peter Martin

December 6, 2011 — 3.00am

AUSTRALIA'S top 1 per cent are grabbing a greater share of our income than at any time since the 1950s.

A new Organisation for Economic Co-operation and Development report finds Australian incomes were their most evenly distributed at the end of the 1970s when the top 1 per cent of earners took home 4.8 per cent of the income. Since the early '80s the proportion has climbed to 8.8 per cent, meaning Australia's top earners amass nine times as much income as if it was distributed evenly.

In almost all of the OECD countries surveyed, income inequality was at its highest since before the First World War and fell sharply during the Second World War.

But whereas income inequality has remained low in mainland European countries and Japan, since bottoming in the '70s, it has climbed since the '80s in the US, Australia, Canada, Ireland and Britain.

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The surge has been particularly dramatic in the US, which gave its top 1 per cent about 8 per cent of the national income at the turn of the 1980s and 18 per cent in the most recent reading. Australia also stands out because of how quickly all ranges have grown. Between the mid-1980s and the late 2000s the income of the top 10 per cent of households has soared 4.5 per cent a year in real terms, more than any other OECD member.

Income earned by the bottom 10 per cent has climbed 3 per cent a year, also one of the fastest rates in the OECD.

But the compounding effect of the different rates has opened up a very wide income gap. A family taking home $30,000 in the mid-1980s would be earning $68,000 today if income had grown 3 per cent a year. A family earning $30,000 enjoying a 4.5 per cent rate of growth would earn $103,000 today.

Entitled Divided We Stand the report is unable to identify any one single cause of growing income inequality in English-speaking nations, saying it could flow from increased global competition for highly skilled workers.

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It could be that advances in information technology are making highly skilled workers more prized, or it could be that highly paid workers are putting in more hours.

It also identifies "assortative mating", a phenomenon in which high earners increasingly marry partners who are also high-earning - "doctors marrying doctors rather than nurses". It says 40 per cent of couples where both partners work have similar earnings compared with 33 per cent two decades ago.